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The attorney-client privilege is such a foundation of the American legal system that most counsel take its application for granted. But other countries don’t necessarily share our values. If your clients have offices in Europe, be prepared for that privilege to be tossed out the window. If the EU Competition Law Commission decides to conduct a “dawn raid” on one of your European offices, they can confiscate and use against the company any information they find. From the in-house counsel’s office they can take anything they like: “privileged and confidential” documents, electronic files, intranet resources, even documents from outside counsel in the United States and elsewhere that express legal opinions. Is all of this an attack on the privilege and its public policy purposes? You bet. The EU raiders will argue that they respect the privilege for communications between company officials and EU-licensed outside counsel. It’s in-house counsel, wherever they are licensed, and outside counsel licensed in non-EU jurisdictions who will fall into the deep net of the dawn raiders. How can the EU Competition Law authorities get away with this? Led by Commissioner Mario Monti, they point to a 20-year-old decision of the European Court of Justice, which established the following criteria for a lawyer and client to benefit from the protections of the attorney-client privilege: 1. The lawyer must be a member of a relevant EU member state professional association; 2. The association must have a code of conduct with rules for ethical behavior; 3. That code of conduct must be enforced by disciplinary sanctions; and 4. The lawyer must exercise independent judgment in his or her role. What the court decided in this case was that it was impossible for an in-house counsel to provide independent advice since she is bound to her client in an employer-employee relationship. ( Australian Mining and Smelting (AM&S) Europe Ltd. v. Commission, Case 155/79, [1982] E.C.R. 1575, [1982] 2 C.M.L.R. 264.) Here’s the problem with Commissioner Monti’s reliance on this case in a self-serving effort to increase the chances of his raiders finding incriminating documents: First, at the time of the AM&Sdecision, there were very few bars in Europe that admitted in-house counsel, on the grounds that an in-house lawyer would be unable to exert independent judgment. But now Belgium, Denmark, Germany, Ireland, Norway, Portugal, Spain and the United Kingdom all allow in-house counsel to be full members of their bars, recognizing that they are no less capable of independence from the inappropriate influence of their clients than outside counsel are. Further, Monti has thwarted the efforts of the European Parliament to overturn the AM&Scase. The Parliament was considering legislation — at the urging of the American Corporate Counsel Association; its European affiliate, the Global Corporate Counsel Association; and the European Company Lawyers Association (ECLA), among others — to recognize the privilege for in-house counsel through an amendment to the recently passed Modernisation Proposal. Monti successfully argued against the amendment, on the grounds that allowing the privilege would make his investigations of “guilty” companies much more difficult — in effect, that extension of the privilege should be dependent on the convenience, or inconvenience, to the prosecutor rather than on the rights of the client. Attempts to overturn the case are now being made in the EU’s Ministry of Justice. So which is it? Are in-house counsel co-conspiring, untrustworthy scoundrels, or just awfully inconvenient obstacles to a more efficient investigation of presumed-guilty mega-corporations? Both, says Monti in the following passage excerpted from a letter he wrote to the leadership of ECLA: “Because in-house lawyers are not independent and have to follow the instructions given by the management of the company, they could be used as an instrument to commit infringements and conceal documentation on such infringements if they were to benefit from a legal professional privilege. Granting them privilege could lead to the creation of real sanctuary within companies and would hinder the efficiency of investigations.” While this comment reveals how little regard Monti has for the professionalism and value of in-house counsel in general, he has a very different perspective when it comes to his own staff lawyers. He argued in a recent case that his in-house lawyers’ communications should be accorded the privilege when a group of consumers sought to discover papers relating to the commission’s activities in a pending court case. ( Hanne Norup Carlsen and Others v. Council, Case T-610/97 R (March 3, 1998).) The commissioner insists that his hands are tied by the AM&Sprecedent, yet it is worth noting that he has previously argued that he is not bound by individual member state court precedents when creating other procedures for Competition Law authorities and their targets. It seems that Monti defends the commission’s right to ignore precedent, except in the case of in-house counsel and non-EU-admitted outside counsel. PRESUMPTION OF GUILT There’s a huge difference between the U.S. model of in-house counsel as an important bridge between government regulation and client compliance and Monti’s troubling view of them as front men for white-collar criminals. In this country, we regulate lawyers on the presumption that their duty is to help clients obey laws, not obfuscate them. We revere the privilege for encouraging clients to speak openly and candidly with their counselors, who advise them how to follow the legal and safer path. We pride ourselves on our ability to help clients shape better business decisions. Apparently, Monti prefers to regulate based on a presumption that all clients targeted for investigation are guilty and undeserving of the benefit of counsel, unless that counsel is an outside counsel from an EU member state. In-house counsel have improved communication and cooperation between companies and government regulatory agencies. Indeed, in-house counsel are hired because it is less expensive and more desirable to keep the milk in the glass than to hire an outside counsel to clean up a spill. I hope that the response of the American bars to the diminution of the in-house lawyer’s role by the EU Competition Law Commission will be to stand up and fight to protect our clients’ right to privileged communications with their lawyers, regardless of where they are licensed. I also hope that American lawyers and clients will join in our efforts to petition those EU jurisdictions that do not yet admit in-house counsel to do s Bringing these crucial advisers under the regulatory and disciplinary authority of the profession and organized bars benefits clients and consumers and complements the work of government regulators. For more background and information about the efforts of ACCA/GCCA to secure the privilege for clients doing business in Europe, see http://www.acca.com/advocacy/ europrivilegememo.html. The June issue of ACCA Docketwill have a full-length article on this subject. IT’S A GLOBAL ECONOMY “Services” now constitute nearly 80 percent of U.S. exports. In 2000, the United States officially exported $3.2 billion of legal services (the actual number is probably significantly higher). While I would not suggest that we barter our professionalism as a simple commodity in trade relations, it is important to understand that our practices and our clients’ expanding needs will require us to operate as professionals in a global economy. We need to ensure that our work is just as valuable to our clients overseas as it is to our clients at home. If lawyers cannot offer global clients the rights of the attorney-client privilege, clients will have to hire local counsel in every foreign jurisdiction — or they might as well rely on checklists, Internet sites or nonlegal consultants. This debate is about more than protecting any given file; it’s about protecting our professional relationship with our clients across borders. We owe it to our clients and our profession to take an interest in how our services will be “regulated” in non-U.S. jurisdictions. Susan Hackett is senior vice president and general counsel of the American Corporate Counsel Association/Global Corporate Counsel Association. She can be reached at [email protected].

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